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ASIC intensifies scrutiny of AFS licence applications

AFS licence applicants have been told to expect at least a six-month wait for the turnaround of AFS licence applications with ASIC now undertaking a far more extensive assessment process, warns a consulting firm.

The Fold Legal head of licensing Sónia Cruz said in a recent liaison meeting with ASIC, professional licensing consultants were warned to expect at least a six-month turnaround for AFS and credit licence applications.

“According to ASIC, licence application assessment is a critical gatekeeper function in the battle against bad apples entering the industry. So its licensing division has been directed to intensify their scrutiny of applications,” said Ms Cruz.

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“In addition to the increased workload that this entails, the division has [also] been tasked with licensing three new sectors [including] accountants, platform-based MDA providers and crowd-sourced funding intermediaries. And at the same time, insufficient funding has been allocated to the division.”

Consequently staff members have been reduced from 35 to 25, she said, with the resourcing issue unlikely to be solved any time soon.

For many years, ASIC set its service level target for applications and variations at 28 days, she said.

“This increased to 60 days in 2016, but a 60-day time frame still hasn’t been achieved for a considerable time,” said Ms Cruz.

In January 2018, ASIC only managed to finalise 115 of 685 existing and 90 new applications, she noted.

“Bowing to the inevitable, ASIC has altered its service level targets for assessing AFS and credit licence applications. We have now been conditioned to expect 70 per cent of applications to be assessed within 150 days and 90 per cent within 240 days. That’s 5-9 months, give or take,” she said.

“Applications will take longer to assess if they raise complex or new policy issues, or if ASIC is not given all the information they need.”

Ms Cruz said that ASIC is developing a new online licence application, however, which aims to better ‘triage’ applications.

While it’s unclear when the online application will be launched, she said, the triage approach will “ensure that only questions that are relevant to the applicant are asked — which will reduce confusion and potential for error”.

It will also mean that information and documents that are needed to assess the application will be identified and requested in the course of completing the application, she explained, and instead of additional proofs, applicants will be prompted to provide additional information about relevant topics.

“Applicants will be required to justify their answers and, where possible, provide information in diagrammatic form. For example, transaction and money flow charts and organisational charts,” she said.

ASIC will also improve the guidance around information requirements.

“The objective is a ‘one read’ review and analysis by ASIC to reduce double handling and the elapsed time currently taken up by multiple requests for additional information,” she said.

Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.

Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.

Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.

You can email Miranda on: This email address is being protected from spambots. You need JavaScript enabled to view it.